The Prestige Oil Spill in Galicia: Analysis of Legal Compensation Systems and Economic Assessment of Damages to Commercial Fisheries*

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The Prestige Oil Spill in Galicia: Analysis of Legal Compensation Systems and Economic Assessment of Damages to Commercial Fisheries*

in Ocean Yearbook Online


*This study was made possible by financial support from the Spanish Education and Science Ministry (5015AK0564100) and Xunta de Galicia (5015AF9064100).

1. Compensation for pollution damages caused by spills from oil tankers is governed by an international regime elaborated under the auspices of the International Maritime Organization (IMO). The framework for the regime was originally the 1969 International Convention on Civil Liability for Oil Pollution Damage (1969 Civil Liability Convention) and the 1971 International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (1971 Fund Convention). This "old" regime was amended in 1992 by two Protocols, and the amended Conventions are known as the 1992 Civil Liability Convention and the 1992 Fund Convention. The 1992 Conventions entered into force on 30 May 1996. The 1992 Civil Liability Convention governs the liability of shipowners for oil pollution damage. The Convention lays down the principle of strict liability for shipowners and creates a system of compulsory liability insurance. The shipowner is normally entitled to limit his liability to an amount which is linked to the tonnage of his ship. The 1992 Fund Convention, which is supplementary to the 1992 Civil Liability Convention, establishes a regime for compensating victims when the compensation under the applicable Civil Liability Convention is inade- quate. As of 1 August 2007, 117 States had ratified the 1992 Civil Liability Convention, and 101 States had ratified the 1992 Fund Convention. For further information, see . 2. See, among others, A.T. Berwick, "Responsibility and Liability for Environ- mental Damage: A Roadmap for International Environmental Regimes," Georgetorun Interreational Environmental Law Review 10 (1998): 257-267; T. Grigalunas, J. Opaluch, J.E. Diamantides and M. Mazzotta, "Liability for Oil Spill Damages: Issues, Methods, and Examples," Coastal Management 26 (1998): 61-77; C.B. Anderson, "Damage to Natural Resources and the Costs of Restoration," Tulane Law Revieru 72 (1997): 417-491; W. Chao, Pollution from the Carriage, of Oil by .5era: Liability and

Compensation (London: Kluwer Law, 1996); W. Hanemann and I. Strand, "Natural Resource Damage Assessment: Economic Implications for Fisheries Management," American Journal of Agricultural Economics 75 (1993): 1188-1193; and OECD, "The Cost of Oil Spills: Expert Studies," (paper presented at the OECD seminar, Paris, 1982). 3. Special Drawing Rights; 1 SDR is equivalent to roughly US$1.28. 4. Damages to vessels, fishing gear, harbor facilities, streets, promenades, etc., are damages directly attributable to the oil spill. 5. The Fund, according to its discretion and the specific circumstances of each case, appraises the reasonable character of such measures. 6. The following expenses are included: the cost of the personnel, including transport, accommodation, and board; the cost of the materials needed to perform the cleaning operations, including the distribution, reparation and/or replacement of these materials; and finally the net costs resulting from the collection, storing, treatment, and disposal of the recovered hydrocarbon residues and the proportion of the fixed costs the appropriate administration had incurred.

7. As a result of the Exxon Valrlez oil spill, the North American legal system has been including claims for environmental damages, mainly under the Comprehen- sive Environmental Response Compensation and Liability Act (CERCLA 1980) and the Oil Pollution Act (OPA 1990). 8. O. Thebaud, ,J. Perez, J. Hay and D. Bailly, "Le processus d'evaluation et d'indemnisation des dommages causes par les mares noires: elements d'analyse," (paper presented at the Colloque Les lecons techniques de 1'Erika et des autres accidents, Brest, 13-16 March, 2002). With respect to European policy, see G.

Lengagbe and D. Quentin, De 1EYika au Prestige: la politique europeenne de la sicuriti maritime contrariee, Rapport d'inforrnation N° 644 (Paris: Assemblee Nationale, XIIe Legislature, 2003). Disparities in different assessments are analyzed in J. Hay and O. Thebaud, "Evaluation economique et indemnisation des dommages causes par les marees noires: enseignements tires du cas de I' Amoco Cadiz," Economie Appliquie 54, no. 4 (2002): 159-195. 9. I.C. White, "Factors Affecting the Cost of Oil Spills," (paper presented at the GAOCMAO Conference, Oman, 12-14 May 2002). Available online: . 10. For more details, see European Commission Communication from the Commission to the European Parliamenl and to the Council on the safety of the seaborne oil trade, COM (2000) 142 end/2 (2000) and European Gommission Communication from the Commis- sion to the European Parliament and to the Council on a second set of Commun.ity measures on maritime safety following the sinking of the Erika oil tanker, COM (2000) 802 end (2000). 11. Directive 2004/35/EC of the European Parliament and of the Couneil on environmental liability ruith regard to the prevention and remedying of environmental damage, Official Journal of theEuropean Union, L 143 of 30/04/2004 (2004). Available online: . 12. Protocolo de 2003 relativo al convenio internacional sobre la constitucion de un fondo internacional de danos debidos a contaminacion por hidrocarburos, 1992, adopted on 22 February 2006, available online: .

13. An initial payment for 15 percent of the Prestige damages was provisionally established in May 2003. 14. Royal Decree-Law (Real Decreto-Ley) 4/2003 in Spanish Official Bulletin (BOE) 148, June 21, 2003. Available online: , adopted 29 Jan. 2004. 15. Article 5 establishes that those victims receiving the compensation amounts available from the funds will renounce any further action, procedure, or claim in the future, whatever its nature, character, or denomination, either legal or extralegal, in relation to the Prestige disaster. The acceptance of this article will make it impossible to claim potential future damages. 16. Royal Decree (Real Decreto) 276/2005 in Spanish Official Bulletin (BOE) 61, Mar. 12, 2005. Available online: .

17. IOPCF, Annual Report on the Activities of the Internacional Oil Pollution Compensation Funds in 2006 (Great Britain: IOPC, 2006), p. 202. Available online: . 18. F. Bonnieux and P. Rainelli, "Lost Recreation and Amenities: The Erika Spill Perspectives," in Economics, Social and Environmental Effects of the Prestige Spill, ed. A. Prada and M.X Vazquez (Santiago de Compostela: Consello da Cultura Galega, 2004), pp. 139-186.

19. E. Nogueira Moure, M.L. Chas Amil, M.C. Garcia Negro and X.R. Doldan Garcia, "As repercussions sobre o valor non comercial na costa de Galiza," in El impacto del Prestige. Análisis y erialuaci6n de lo.s danos causados por el accidence del Prestige y dispositivos para la regeneracion ambiental y recuperaci6n economica de Galicia, ed. F. Gonzdlez Laxe (A Comma: Fundacion Pedro Barrie de la Maza, 2003), pp. 411-431. 20. See T.A. Grigalunas, R.C. Anderson, G.M. Brown, R. Congar, N.F. Meade and P.E. Sorensen, "Estimating the Cost of Oil Spills: Lessons from the Amoco Cadiz Incident," Marine Resource Economics 2, no. 3 (1986): 239-262; see also M. Hanemann and D. Chapman, "Environmental Damages in Court: The American Trader Case," working paper no. 913 (University of California, Berkeley, Depart- ment of Agricultural and Resource Economics, Berkeley, 2001). Available online: .

21. See R.T. Carson and W.M. Hanemann, A Preliminary Economic Analysis of Recreational Fishing Losses Reflated to the Exxon Valdez Oil Spill, Report to the Attorney General State of Alaska, 1992. Available online: ; R.T. Carson, "Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill," in Economic, Social and Environmental Effects of the Prestige Spill, ed. A. Prada and M.X Vazquez (Santiago de Compostela: Consello da Cultura Galega, 2004), pp. 45-112. Also see D.E. Kahneman and J. Knetsch, "Valuing Public Goods. The Purchase of Moral Satisfaction," Journal of Environmen- tal Economics and Management 22 (1992): 57-70; M. Hanemann and D. Chapman, see n. 20 above. 22. F. Bonnieux and P. Rainelli, "Oil Spills and Tourism: Case Study of the Arreoco Cadiz," in The Cost of Oil Spills, OECD (Paris: OECD, 1982), pp. 150-163; T.A. Grigalunas et al., n. 20 above; P. Burden, J. Isaacs, J. Richardson, S. Braund and E. Witten, "Economic Impacts of the SS Glacier Bay Oil Spill. Technical Report Final Mineral Management Service," Northern Economics, Report no. PB-92-110717/XAB (Anchorage: Minerals Management Service, 1990), p. 148; MJ. Cohen, "Techno- logical Disasters and Natural Resource Damage Assessment: An Evaluation of the Exxon Valdez Oil Spill," Land Economics 71, no. 1 (1995): 65-82; RPA, "Sea Empress Cost-Benefit Project," report prepared by Risk and Policy Analysts Ltd. for the Environment Agency (1997); M.C. Garcia Negro, X.R. Doldan Garcia, E. Nogueira Moure, P.R. Salamo Otero, R. Babio Arcay and I. Blanco Dopico, "Primeira avaliacion dos danos provocados pola mare negra do Aegean Sea," Report to Xunta de Galicia (Santiago de Compostela: Conselleria de Pesca, Marisqueo e Acuicultura, 1994), p. 142; W.H. Pearson, S.M. Al-Ghais, J.M. Neff, C J. Brandt, K.F. Wellman and T. Green, "Assessment of Damages to Commercial Fisheries and Marine Environ- ment of Fujairah, United Arab Emirates, Resulting from the Seki Oil Spill of March 1994: A Case Study," Transfornzations of Middle Eastern Natural Environments: Legacies and Lessons (Bulletin Series) 103 (1998): 407-428.

23. Insofar as the condition of fish populations is highly dependent on fishing pressure, this kind of analysis only makes sense if there is information available about fishing effort. It is necessary to verify whether there are changes in this variable. 24. We will deal with this issue in later sections.

25. In this section we follow R. Iniesta and J. Blanco, "Special Issue: Bioacumulacion de hidrocarburos y metales asociados a vertidos accidentales en especies de interes comercial en Galicia," Reuista Galega dos Recursos Marinos 2 (Fall 2005), pp. 1-200, where they summarize very well the present knowledge on bioaccumulation of the products present in oil spills in the Galician species of commercial importance, explaining the most likely behaviors during the spill evolution. 26. According to M.C. Garcia Negro, "Considerations on the Study of Economic Damage in Productive Sectors Directly Linked with Marine Activities. The Case of the Aegean Sea" in Economic, Social and "Environmental Effects of the Prestige Spill, ed. A. Prada and M.X. Vazquez (Santiago de Compostela: Consello da Cultura Galega, 2004), pp. 354-417; a study carried out by Nelson Smith in the area affected by the Torrey Cannon spill revealed mortality rates among European pilchard spawn on the order of 50-90 percent.

27. It is the wealth or scarcity of young specimens that determines the future evolution of the species. 28. In D. Zeller and D. Pauly, "Good News, Bad News: Global Fisheries Discards Are Declining But So Are Total Catches," Fish and Fisheries 6 (2005): 156-159. Different estimates exist on global fish discards.

29. This has happened in Galicia with species such as the sea urchin, traded almost completely in outside markets, and the warty venus or the so-called poor cod, a species similar to the pouting.

30. See "Fishery Statistics: Reliability and Policy Implications," Technical Paper Y3354/M (FAO Fisheries Department, Rome, 2002). Available online: . 31. See . Until 1986, the Anuarios de Pesca Maritirrza issued by the Spanish Ministry for Fishing and Agriculture collected landing data organized by species and landing port. At present, the Spanish authority Puertos del Estado, an institution dependent on the Spanish Ministry for Development, provides global landing data of the 27 port authorities dependent on the State Administration that are considered to be of general interest. Five Galician ports are included (A Coruna, Ferrol, Vilagarcia de Arousa, Marin, and Vigo). 32. Spanish Royal Decree 2064/2004, BOE, 261, 29 October 2004 and Galician Order of 4 August 2004 DOG, 155, 11 August 2004. 33. Currently, the data cover the period between 2000 and 2006. 34. It is also possible to access a historical series beginning in 1997, which provides data on total landed kilograms on an annual and monthly basis for the same species and fish markets, although no information is provided on sales turnover or prices paid.

35. SIP Galicia has provided information on fifty main species since 1994 and for all species in Galician fish markets since 1999. Apart from the stated discrepancies, it is remarkable how many landings are listed by SIP Galicia as "unknown" species.

36. This was revealed by a direct survey made among local fishermen's guilds, which enabled us to discard the role of these variables in the potential changes in the offer of fish products. 37. It must be highlighted that verifications previous to the study allowed us to use information from the Pesca�Galicia database, the only available statistical source, to analyze the series of landings from the Costa da Morte, thereby avoiding the main problems with this source as previously pointed out. 38. Fishers on board Galician joint ventures in EU and non-EU countries are not included in national, regional, or European statistics. Therefore, the data below are to be understood as a minimum-data a�rfrroach in the understanding of the qualitative and quantitative magnitude of the Galician fishing sector.

39. Specialization index = (Eij/E��/(Ei/E), where Eij is the number of employees in the i industry of the j municipality; Ej is the total number of employees in j municipality; Ej is the number of employees in the i industry in the whole area of Fisterra, and E is the total number of employees in the area. . 40. For methodological purposes, we should point out that only those activities with ten or more employees were selected, the relative specialization in each industry and activity area being expressed through the definition of rates above 1, which is a sign of a highly specialized industry. 41. M.C. Garcia Negro, dir., Input-Output Tables for the Galician Fishing and Preserved Fish Sectors 1999, 1st ed. (Santiago de Compostela: Galician Government, 2003). s 42. C.S. Villasante, X.R. Doldan Garcia and A. Ferro Senin, "As relaci6ns co mar e a importancia socioeconomica da pesca nas comunidades costeiras: especial referenda a Costa da Morte," paper presented at the conference Globalizaci6n, Arraigo Xeografica e Comunidades Costeiras en tempos de cambio, Muros, 14-16 Elpril 2005.

43. The fishing ports are in Caion, Camarinas, Camelle, Corcubion, Corme, Fisterra, Laxe, Lira (Carnota), Malpica, Muxia, and 0 Pindo; the fish auction markets, ordered according to their relative relevance in the total amount of landings in the area, are in Malpica, Camarinas, Laxe, Fisterra, Corme, Lira (Carnota), Muxia, Corcubion, Rio An116ns, 0 Pindo, Baldaio, and Camelle. 44. As well as the number of fishing vessels, it is also important to take into account characteristics such as gross register tonnage (GRT) and power (kw). In this case this ranking presents slight variations. In relation to GRT, Muxia (25.8 percent), Malpica (16.3 percent) and Laxe (12.2 percent) are the three most important ports. In terms of power the ranking would be Malpica (20.6 percent), Muxfa (16.8 percent) and Camarinas (14.3 percent).

45. This methodology has been implemented in recent studies on the Prestige, such as M.L. Loureiro, A. Ribas, E. Lopez and E. Ojea, "Estimated Costs and Admissible Claims Linked to the Prestige Oil Spill," Ecological Economics 59, no. 1 (2005): 48-63 and M.D. Garza-Gil, A. Prada Blanco and M. X. Vazquez-Rodriguez, "Estimating the Short-Term Economic Damages from the Prestige Oil Spill in the Galician Fisheries and Tourism," Ecological Economics 58, no. 4 (2005): 842-849.

46. Two further categories are used, "Various shellfish" (4.7 percent of the total amount of landed weight for the selected period) and "Various" (0.75 Percent). 47. These species include mainly small landings of species from other areas that are recorded in this section by mistake.

48. There were 323 vessels in 2002; 316 in 2003; 299 in 2004; and 250 in 2005. 49. We exclude the denomination "Various Shellfish" from this analysis because it is impossible to identify all the species included under this name.

50. In the case of octopus, the Galician Regional Government established a special three-month ban in 2006 and 2007 due to the significant decrease in landings experienced in many Galician areas.

51. Ballan wrasse is a Ria-specific species. All of its catches, therefore, belong to the Rfa category. 52. The monthly average of vessels for the eleven most important species of the Period from 2001-2005 was 22.8.


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